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Introduction to accounting ratios

Retiring 29 March 2024. Those registering up to that day will have access for 90 days.

Many organisations publish financial statements. A range of stakeholders use these statements to analyse organisational performance. Internal auditors will also find these statements useful for audit engagements - as part of fieldwork and supporting engagement opinions.

Internal (and external) auditors are naturally interested in knowing whether the financial information provided by the organisation is an accurate reflection of its financial health. They also want to ascertain that the statements do not conceal problems, whether through poor accounting techniques or deliberate attempts to mislead. Basic analysis of financial statements, such as whether sales have gone up or net profits have gone down, will provide some useful information. But more insightful information can be gathered through ratio analysis. Such analysis provides a fairly simple means of examining the financial condition of an organisation. In turn, this can help focus limited time and resource to particular areas, thus supporting a risk based approach.

This course will help you analyse financial data and, more importantly, understand how to interpret this analysis to form useful conclusions about an organisation.

Who should do the course?

  • Internal auditors who want to understand how to use and interpret accounting ratios in their audit work.

What will I learn?

After completing the course, you will be able to:

  • appreciate the importance of financial results to organisations;
  • recall different user groups (stakeholders) interested in financial data;
  • explain the use of accounting ratios to analyse organisational performance and for competitive benchmarking;
  • identify and use accounting ratios to analyse profitability, efficiency and liquidity;
  • calculate accounting ratios from given financial statements;
  • assess organisational performance using accounting ratios and appropriate comparative information;
  • suggest further internal audit work indicated by an analysis of financial statements; and
  • explain the limitations of financial statements and accounting ratios in providing information on organisational performance.

What will I do?

The course comprises a topic and a quiz. You will be recorded as having completed the course when you have worked through the topic and reached a minimum grade of 80% on the quiz. You can download your certificate of completion and a course summary when you have successfully completed the course.

You have three months to complete the course; however it shouldn’t take you more than two hours to do.

Pre-requisite knowledge

The course assumes you have an understanding of:

  • the content and presentation of financial statements, and
  • accounting and auditing controls for finance.

Technical requirements

The course is wholly online so you need access to an internet-enabled device.

Important information

Access to our course content will be made available for 90 days from the date of purchase. After successfully completing a course, you’ll be able to download the relevant course summary to keep and refer to in the future. You will also receive a CPE certificate for your records.

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  • Click on the blue button that says ‘Access the study system here’ to access your personalised study system dashboard where you will see the course(s) you have purchased.  
  • If it is your first time using the study system, you will need to enter your email address on your profile page to activate access.

CPE competency areas covered

  • Performance (engagement fieldwork)
  • Environment (accounting and finance)

2 CPE points

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Standard Member £50.00 ex. VAT
Standard Non-Member £62.00 ex. VAT

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